With Michigan's
economy in decline and families departing the state in increasing numbers, tax
revenues that pay for our public schools are also falling. Because employee
compensation costs consume around 80 percent of most school districts'
operating budgets, and also include unsustainable retirement benefit
provisions, the Legislature is consider proposals to reduce these expenses.

Notwithstanding
fiscal and economic realities, the Michigan Education Association, the state's
largest school employee union, has pulled out all the stops in its efforts to
shut down any reforms in this area. One of the union's tools is a claim that
school employees have already made "$1 billion worth" of concessions over the
last three years.

The data,
however, fails to show any significant reduction in public school labor costs.

Typical of the
union's claims was a 2009 Detroit News column written by MEA President Iris
Salters, stating that school employees saved taxpayers $200 million in salary concessions
and another $700 million in health insurance reductions over the last
three years. The MEA has repeated this claim a number of times, including in
recent radio and television advertisements. Only the televised ads cite the
source for the claim, referencing the Michigan Department of Education
Financial Information Database.

Those "$1
billion in savings," however, are not found in this data. Instead, it shows
that Michigan public schools spent $13.758 billion on school employee
compensation in 2006. In 2008 (the latest year available), the number had
increased by $39 million to $13.797 billion.

To be sure, the
increase was not generated by the two specific items mentioned by the MEA —
employee salaries and health insurance — but neither did changes in these two areas come anywhere near to saving "$1
billion." Total payments for employee salaries and health insurance stayed
level during this period.

In contrast, the
unsustainable defined-benefit pension system and post-retirement health care
benefits were key contributors to the overall compensation expense increase.

To get a more
accurate picture of school employee compensation changes it is necessary to
examine a longer time period. From 2000 to 2008, total compensation for school
employees increased by $90 million after adjusting for inflation. The number of
students and full-time school employees, however, declined during this same
time. When the gross amounts are adjusted to reflect those declines, they show
taxpayers shouldering $280 more per pupil in total compensation at the end of
this period.

In absolute
terms, inflation-adjusted school employee compensation increases have been
relatively modest. Compared to the economic devastation and income loss
suffered by the rest of the state over the past decade, however, those
increases assume a different character.

From 2000 to
2008, the per capita personal income of Michigan's population plummeted by
nearly 5 percent after adjusting for inflation. Total private-sector earnings
from 2000 to 2008 — which includes both employee compensation and profits
earned by businesses — fell a whopping 12.8 percent in the state, according to
the Bureau of Economic Analysis. Not surprisingly, the government's ability to
afford those generous school compensation packages also diminished, with total
state tax revenues down 7 percent from 2000 to 2008 after adjusting for
inflation.

School employees
earning more than the rest of the taxpaying population is nothing new in
Michigan. In 1996, the Citizen's Research Council of Michigan reported that, in
proportion to the per capita personal income of taxpayers that support their
salaries and benefits, Michigan teachers had the highest pay in the nation.

The most recent
data available show that Michigan again ranks number one in the country by this
measure, and has done so since the 2003-2004 school year.

Michigan's
economy and the economic well-being of its population have declined
dramatically over the last decade. Contrary to union claims, however, there has
been no "shared sacrifice" by school employees. If anything, compared to the
rest of us, their relative well-being in economic terms has likely never been
better.

#####

Michael Van Beek is director of
education policy at the Mackinac Center for Public Policy, a research and
educational institute headquartered in Midland, Mich. Permission to
reprint in whole or in part is hereby granted, provided that the author and the
Center are properly cited.

ISSN: 1093-2240,
SKU: V2010-25

SummarySchool employees on the whole have not saved taxpayers money through contract concessions and have remained relatively shielded from Michigan’s economic downturn. Michigan’s teachers are the nation’s highest-paid when compared to state wealth.